<PAGE>

                                 UNITED STATES
                      SECURITIES AND EXCHANGE COMMISSION
                           Washington, D. C. 20549
                                  FORM 10-K/A
                                Amendment No. 2

(Mark One)

[x]  ANNUAL REPORT PURSUANT TO SECTION 13 OR 15 (d) OF THE SECURITIES EXCHANGE
ACT OF 1934

           For the fiscal year ended December 31, 1998
                                     -----------------

                                      OR

[ ]  TRANSITION REPORT PURSUANT TO SECTION 13 OR 15 (d) OF THE SECURITIES
EXCHANGE ACT OF 1934

      For the transition period from ______________ to ___________________


                        Commission file number 0-19139

                          CNL INCOME FUND VIII, LTD.
            (Exact name of registrant as specified in its charter)

               Florida                                59-2963338
     (State or other jurisdiction of      (I.R.S. Employer Identification No.)
       incorporation or organization)

                            450 South Orange Avenue
                            Orlando, Florida  32801
         (Address of principal executive offices, including zip code)

      Registrant's telephone number, including area code:  (407) 650-1000

          Securities registered pursuant to Section 12(b) of the Act:

         Title of each class:         Name of exchange on which registered:
               None                             Not Applicable

          Securities registered pursuant to Section 12(g) of the Act:

              Units of limited partnership interest ($1 per Unit)
                               (Title of class)

     Indicate by check mark whether the registrant (1) has filed all reports
required to be filed by Section 13 or 15(d) of the Securities Exchange Act of
1934 during the preceding 12 months (or such shorter period that the registrant
was required to file such reports), and (2) has been subject to such filing
requirements for the past 90 days:  Yes      X      No  _______
                                         ---------

     Indicate by check mark if disclosure of delinquent filers pursuant to Item
405 of Regulation S-K is not contained herein, and will not be contained, to the
best of registrant's knowledge, in definitive proxy or information statements
incorporated by reference in Part III of this Form 10-K or any amendment to this
Form 10-K. [x]

     Aggregate market value of the voting stock held by nonaffiliates of the
registrant:  The registrant registered an offering of 35,000,000 units of
limited partnership interest (the "Units") on Form S-11 under the Securities Act
of 1933, as amended.  Since no established market for such Units exists, there
is no market value for such Units.  Each Unit was originally sold at $1 per
Unit.

                      DOCUMENTS INCORPORATED BY REFERENCE:
                                      None
<PAGE>

     The Form 10-K of CNL Income Fund VIII, Ltd. for the year ended December 31,
1998 is being amended to revise the disclosure under Item 1. Business.

                                    PART I

Item 1.  Business

     CNL Income Fund VIII, Ltd. (the "Registrant" or the "Partnership") is a
limited partnership which was organized pursuant to the laws of the State of
Florida on August 18, 1989.  The general partners of the Partnership are Robert
A. Bourne, James M. Seneff, Jr. and CNL Realty Corporation, a Florida
corporation (the "General Partners").  Beginning on August 2, 1990, the
Partnership offered for sale up to $35,000,000 of limited partnership interests
(the "Units") (35,000,000 Units at $1 per Unit) pursuant to a registration
statement on Form S-11 under the Securities Act of 1933, as amended, effective
January 30, 1990.  The offering terminated on March 7, 1991, at which date the
maximum offering proceeds of $35,000,000 had been received from investors who
were admitted to the Partnership as limited partners (the "Limited Partners").

     The Partnership was organized to acquire both newly constructed and
existing restaurant properties, as well as properties upon which restaurants
were to be constructed (the "Properties"), which are leased primarily to
operators of national and regional fast-food and family-style restaurant chains
(the "Restaurant Chains").  Net proceeds to the Partnership from its offering of
Units, after deduction of organizational and offering expenses, totaled
$30,975,000, and were used to acquire 38 Properties, including interests in
eight Properties owned by joint ventures in which the Partnership is a co-
venturer, and to establish a working capital reserve for Partnership purposes.
During the year ended December 31, 1995, the Partnership sold its Property in
Ocoee, Florida and reinvested the majority of the net sales proceeds in a
Property in North Fort Myers, Florida.  Also, during the year ended December 31,
1995, the Partnership sold two Properties in Jacksonville, Florida.  During the
year ended December 31, 1996, the Partnership reinvested the remaining net sales
proceeds from the 1995 sale of the Property in Ocoee, Florida, in Middleburg
Joint Venture, in which the Partnership is a co-venturer to purchase and hold
one property in Middleburg Heights, Ohio.  Also, during the year ended December
31, 1996, the Partnership sold its Property in Orlando, Florida.  As a result of
the above transactions, as of December 31, 1998, the Partnership owned 36
Properties.  The 36 Properties included interests in nine Properties owned by
joint ventures in which the Partnership is a co-venturer.  The Properties are
leased on a triple-net basis with the lessees responsible for all repairs and
maintenance, property taxes, insurance and utilities.

     On March 11, 1999, the Partnership entered into an Agreement and Plan of
Merger with CNL American Properties Fund, Inc. ("APF"), pursuant to which the
Partnership would be merged with and into a subsidiary of APF (the "Merger").
APF is a real estate investment trust whose primary business is the ownership of
restaurant properties leased on a long-term, "triple-net" basis to operators of
national and regional restaurant chains.  APF has agreed to issue shares of its
common stock, par value $0.01 per share (the "APF Shares"), as consideration for
the Merger.  At a special meeting of the partners that is expected to be held in
the fourth quarter of 1999, Limited Partners holding in excess of 50% of the
Partnership's outstanding limited partnership interests must approve the Merger
prior to consummation of the transaction.  If the Limited Partners at the
special meeting approve the Merger, APF will own the Properties and other assets
of the Partnership.

     In the event that the Limited Partners vote against the Merger, the
Partnership will hold its Properties until the General Partners determine that
the sale or other disposition of the Properties is advantageous in view of the
Partnership's investment objectives.  In deciding whether to sell Properties,
the General Partners will consider factors such as potential capital
appreciation, net cash flow and federal income tax considerations.  Certain
lessees also have been granted options to purchase Properties, generally at the
Property's then fair market value after a specified portion of the lease term
has elapsed.  The Partnership has no obligation to sell all or any portion of a
Property at any particular time, except as may be required under property
purchase options granted to certain lessees.

Leases

     Although there are variations in the specific terms of the leases, the
following is a summarized description of the general structure of the
Partnership's leases. The leases of the Properties owned by the Partnership and
the
<PAGE>

joint ventures in which the Partnership is a co-venturer provide for initial
terms, ranging from 14 to 20 years (the average being 18 years), and expire
between 2005 and 2016. All leases are on a triple-net basis, with the lessees
responsible for all repairs and maintenance, property taxes, insurance and
utilities. The leases of the Properties provide for minimum base annual rental
payments (payable in monthly installments) ranging from approximately $41,300 to
$213,800. All of the leases provide for percentage rent, based on sales in
excess of a specified amount. In addition, a majority of the leases provide
that, commencing in specified lease years (ranging from the third to the sixth
lease year), the annual base rent required under the terms of the lease will
increase.

     Generally, the leases of the Properties provide for two to four five-year
renewal options subject to the same terms and conditions as the initial lease.
Lessees of 26 of the Partnership's 36 Properties also have been granted options
to purchase Properties at the Property's then fair market value after a
specified portion of the lease term has elapsed. Fair market value will be
determined through an appraisal by an independent appraisal firm. Under the
terms of certain leases, the option purchase price may equal the Partnership's
original cost to purchase the Property (including acquisition costs), plus a
specified percentage from the date of the lease or a specified percentage of the
Partnership's purchase price, if that amount is greater than the Property's fair
market value at the time the purchase option is exercised.

     The leases also generally provide that, in the event the Partnership wishes
to sell the Property subject to that lease, the Partnership first must offer the
lessee the right to purchase the Property on the same terms and conditions, and
for the same price, as any offer which the Partnership has received for the sale
of the Property.

     During 1994, the lease relating to the Property in Tiffin, Ohio, was
amended to provide for the payment of reduced annual base rent with no scheduled
rent increases.  However, the lease amendment provided for a lower percentage
rent breakpoint, as compared to the original lease agreement, a change that was
designed to result in higher percentage rent payments at any time that
percentage rent became payable.  In accordance with a provision in the
amendment, as a result of the tenant assigning the lease to a new tenant during
1998, the rents under the assigned lease reverted back to those required under
the original lease agreement.

     During 1998, the leases relating to the Burger King Properties in New City
and Syracuse, New York and New Philadelphia and Mansfield, Ohio, and Asheville,
North Carolina, were amended to provide for rent reductions from August 1998
through the end of the lease terms.

Major Tenants

     During 1998, three lessees of the Partnership and its consolidated joint
venture, Golden Corral Corporation, Carrols Corporation and Restaurant
Management Services, Inc., each contributed more than ten percent of the
Partnership's total rental income (including rental income from the
Partnership's consolidated joint venture and the Partnership's share of rental
income from eight Properties owned by unconsolidated joint ventures). As of
December 31, 1998, Golden Corral Corporation was the lessee under leases
relating to four restaurants, Carrols Corporation was the lessee under leases
relating to five restaurants and Restaurant Management Services, Inc. was the
lessee under leases relating to five restaurants. It is anticipated that, based
on the minimum rental payments required by the leases, these three lessees each
will continue to contribute more than ten percent of the Partnership's total
rental income in 1999. In addition, three Restaurant Chains, Golden Corral
Family Steakhouse Restaurants, Burger King and Shoney's, each accounted for more
than ten percent of the Partnership's total rental income in 1998 (including
rental income from the Partnership's consolidated joint venture and the
Partnership's share of rental income from eight Properties owned by
unconsolidated joint ventures). In 1999, it is anticipated that these three
Restaurant Chains each will continue to account for more than ten percent of the
Partnership's total rental income to which the Partnership is entitled under the
terms of the leases. Any failure of these lessees or Restaurant Chains could
materially affect the Partnership's income if the Partnership is not able to
re-lease the Properties in a timely manner. No single tenant or group of
affiliated tenants lease Properties with an aggregate carrying value in excess
of 20 percent of the total assets of the Partnership.

Joint Venture Arrangements

     The Partnership has entered into a joint venture arrangement, Woodway Joint
Venture, with an unaffiliated entity to purchase and hold one Property. In
addition, the Partnership has entered into three separate joint venture
arrangements: Asheville Joint Venture with CNL Income Fund VI, Ltd., an
affiliate of the General Partners, to purchase and hold one Property; CNL
Restaurant Investments II with CNL Income Fund VII, Ltd. and CNL Income
<PAGE>

Fund IX, Ltd., affiliates of the General Partners, to purchase and hold six
Properties; and Middleburg Joint Venture with CNL Income Fund XII, Ltd., an
affiliate of the General Partners, to purchase and hold one Property. Each of
the affiliates is a limited partnership organized pursuant to the laws of the
State of Florida.

     The joint venture arrangements provide for the Partnership and its joint
venture partners to share in all costs and benefits associated with the joint
ventures in accordance with their respective percentage interests in the joint
ventures.  The Partnership has an 87.68% interest in Woodway Joint Venture, an
85.54% interest in Asheville Joint Venture, a 36.8% interest in CNL Restaurant
Investments II, and a 12.46% interest in Middleburg Joint Venture.  The
Partnership and its joint venture partners are also jointly and severally liable
for all debts, obligations and other liabilities of the joint ventures.

     Woodway Joint Venture, Asheville Joint Venture and Middleburg Joint Venture
each have an initial term of 20 years and, after the expiration of the initial
term, continue in existence from year to year unless terminated at the option of
either joint venturer or by an event of dissolution.  Events of dissolution
include the bankruptcy, insolvency or termination of any joint venturer, sale of
the Property owned by the joint venture and mutual agreement of the Partnership
and each joint venture partner to dissolve the joint venture.  CNL Restaurant
Investments II's joint venture agreement does not provide for a fixed term, but
continues in existence until terminated by any of the joint venturers.

     The Partnership has management control of Woodway Joint Venture and shares
management control equally with affiliates of the General Partners for Asheville
Joint Venture, CNL Restaurant Investments II and Middleburg Joint Venture.  The
joint venture agreements restrict each venturer's ability to sell, transfer or
assign its joint venture interest without first offering it for sale to its
joint venture partner, either upon such terms and conditions as to which the
venturers may agree or, in the event the venturers cannot agree, on the same
terms and conditions as any offer from a third party to purchase such joint
venture interest.

     Net cash flow from operations of Woodway Joint Venture, Asheville Joint
Venture, CNL Restaurant Investments II and Middleburg Joint Venture is
distributed 87.68%, 85.54%, 36.8%, and 12.46%, respectively, to the Partnership
and the balance is distributed to each of the other joint venture partners in
accordance  with their respective percentage interest in the joint venture.  Any
liquidation proceeds, after paying joint venture debts and liabilities and
funding reserves for contingent liabilities, will be distributed first to the
joint venture partners with positive capital account balances in proportion to
such balances until such balances equal zero, and thereafter in proportion to
each joint venture partner's percentage interest in the joint venture.

     The use of joint venture arrangements allows the Partnership to fully
invest its available funds at times at which it would not have sufficient funds
to purchase an additional property, or at times when a suitable opportunity to
purchase an additional property is not available.  The use of joint venture
arrangements also provides the Partnership with increased diversification of its
portfolio among a greater number of properties.

Certain Management Services

     CNL Fund Advisors, Inc., an affiliate of the General Partners, provides
certain services relating to management of the Partnership and its Properties
pursuant to a management agreement with the Partnership.  Under this agreement,
CNL Fund Advisors, Inc. is responsible for collecting rental payments,
inspecting the Properties and the tenants' books and records, assisting the
Partnership in responding to tenant inquiries and notices and providing
information to the Partnership about the status of the leases and the
Properties.  CNL Fund Advisors, Inc. also assists the General Partners in
negotiating the leases.  For these services, the Partnership has agreed to pay
CNL Fund Advisors, Inc. an annual fee of one percent of the sum of gross
operating revenues from Properties wholly owned by the Partnership plus the
Partnership's allocable share of gross revenues of joint ventures in which the
Partnership is a co-venturer, but not in excess of competitive fees for
comparable services.  Under the management agreement, the management fee is
subordinated to receipt by the Limited Partners of an aggregate, ten percent,
cumulative, noncompounded annual return on their adjusted capital contributions
(the "10% Preferred Return"), calculated in accordance with the Partnership's
limited partnership agreement (the "Partnership Agreement").  In any year in
which the Limited Partners have not received the 10% Preferred Return, no
management fee will be paid.

     The management agreement continues until the Partnership no longer owns an
interest in any Properties unless terminated at an earlier date upon 60 days'
prior notice by either party.
<PAGE>

Employees

     The Partnership has no employees.  The officers of CNL Realty Corporation
and the officers and employees of CNL Fund Advisors, Inc. perform certain
services for the Partnership.  In addition, the General Partners have available
to them the resources and expertise of the officers and employees of CNL Group,
Inc., a diversified real estate company, and its affiliates, who may also
perform certain services for the Partnership.
<PAGE>

                                  SIGNATURES

     Pursuant to the requirements of Section 13 or 15(d) of the Securities
Exchange Act of 1934, the Registrant has duly caused this report to be signed on
its behalf by the undersigned, thereunto duly authorized, on the 17/th/ day of
December, 1999.

                                      CNL INCOME FUND VIII, LTD.

                                      By:   CNL REALTY CORPORATION
                                            General Partner

                                            /s/ Robert A. Bourne
                                            ---------------------------
                                            ROBERT A. BOURNE, President


                                      By:   ROBERT A. BOURNE
                                            General Partner

                                            /s/ Robert A. Bourne
                                            ---------------------------
                                            ROBERT A. BOURNE


                                      By:   JAMES M. SENEFF, JR.
                                            General Partner

                                            /s/ James M. Seneff, Jr.
                                            ---------------------------
                                            JAMES M. SENEFF, JR.
<PAGE>

     Pursuant to the requirements of the Securities Exchange Act of 1934, this
report has been signed below by the following persons on behalf of the
Registrant and in the capacities and on the dates indicated.

<TABLE>
<CAPTION>
             Signature                                Title                                    Date
             ---------                                -----                                    ----
<S>                                    <C>                                              <C>
/s/ Robert A. Bourne                    President, Treasurer and Director               December 17, 1999
------------------------------------   (Principal Financial and Accounting
Robert A. Bourne                                     Officer)

/s/ James M. Seneff, Jr.               Chief Executive Officer and Director             December 17, 1999
------------------------------------      (Principal Executive Officer)
James M. Seneff, Jr.
</TABLE>